* Trade and mills bought steady at the lows
NEW YORK, March 21 (Reuters) – Cotton futures settled higher Wednesday on mostly speculative and investor buying as players adjusted positions ahead of the release of a government sales report Thursday, analysts said.
The benchmark May contract on ICE Futures U.S. rose 0.41 cent to end at 88.31 cents per lb, dealing from 87.86 to 89.49 cents.
Volume traded Wednesday amounted to slightly more than 12,700 lots, slightly more than 50 percent under the 30-day norm, Thomson Reuters data showed.
Mike Stevens, an independent cotton analyst in Louisiana, said some of the buying may be in anticipation “of another good export” report from the government.
U.S. Agriculture Department’s weekly export sales report will be released at 8:30 a.m. EDT (1230 GMT) Thursday.
The report is a gauge of demand for U.S. cotton and has lately seen steady offtake of American fiber by China, the world’s top consumer of cotton.
Technically, the May contract traded above the 20-day moving average at 89.15 cents but the advance was pared going into the close.
Other moving averages used by many in the cotton trade such as the 40-day moving average and the 55-day moving average sat above the market at 91.20 and 92.76 cents, respectively, basis the May, Thomson Reuters data showed.
Open interest,- an indicator of investor exposure, rose for the 10th straight session to 188,724 lots as of March 20, the highest since Feb. 14, ICE Futures U.S. data showed.
Investors appeared to be expanding short positions in cotton, betting prices will fall due to rising supplies and bloated cotton stocks, traders said.
Last Friday, the U.S. Commodity Futures Trading Commission said net short positions in the cotton market stood at 7,553 lots, against a net long position of more than 14,000 lots at the start of February.
(Reporting by Rene Pastor; Editing by)